Group life insurance products offer benefits to a group of people. Group policies are affordable and the cost of insurance is much lesser than for an individual policy. The insurance cover will be provided to a group of people under a single master life insurance policy. Employers are bound to provide an insurance plan to their employees and therefore often offer group insurance cover. By providing insurance coverage to employees, they increase their sense of loyalty, resulting in enhanced productivity.
Master contract –Individuals are enrolled into a group insurance plan automatically. Let us explain how it works. Under a group insurance policy, an employer will purchase a master contract from an insurance company.
Benefits of Group Life Insurance
The premium will be based on the number of members and the amount of coverage offered. If there is an increase in the number of members, the premium will increase proportionately. Similarly, the excess premium will be returned by the insurance company if there is a drop in the number of employees. The insurer will account for the group’s collective health, but members will not be required to undergo any medical tests.
Affordable –Group insurance policies are not as expensive as individual insurance policies. This is because the large number of insured under one policy allows the insurer to club together various kinds of expenses such as administration, operation and renewal.
Contributory – If the plan is sponsored by the employer, there is no financial burden on the employee. On the other hand, the employee should partake in the premium by paying a nominal amount which comes under a contributory life insurance plan.
Term life coverage – Most group life insurance policies offer term life insurance cover. The policy can be renewed on an annual basis. No evidence needs to be provided to the insurance company to avail the insurance policy. Thus, it is possible to enroll in the plan without undergoing medical tests. This simple and straightforward process delivers benefits to the employers as well as employees. Employers get a tax deduction for buying an insurance plan. If the insurance plan is contributed by the employee, the amount paid by the employee will be deducted from income tax under section 80C.
Permanent life coverage – Permanent life insurance offers coverage for the entire lifespan of members. There are different clauses under permanent life insurance coverage.
If you subscribe to a general group insurance policy, the cash value will not be available to the employee. When you leave the organization, it will be available to other members.
If you go for a paid-up policy, you will get the benefits of a term policy and a whole life insurance plan. The expenses towards the term policy will be borne by the employer and the payment for the whole insurance portion will be borne by the employee. If you exit the company by means of retirement, resignation or getting laid off, you will continue to own the policy and can enjoy the benefits throughout your life.
When you choose the universal life insurance plan, most of the risk is borne by the employer. The group insurance plan will have same features as that of universal individual life insurance plan.
Drawbacks of group life insurance plans
The group life insurance premium is very low and very affordable. However, the cover is also limited so that you should buy an additional insurance plan. By choosing the most suitable individual insurance plan, you can make the most of your investment.
The group life insurance plan offered by the employer will not cover your spouse and children. Hence, you should reassess your insurance needs and you choose the best policy as per your needs.
The group insurance policy protects against the risk of credit as well as life. The coverage of the insurance is directly proportional to the loan amount and the rate of interest.
Bajaj Allianz offers various kinds of group insurance plans. These plans are devised to offer the highest level of protection for members as well as their families. The employer can offer uniform cover or varied cover.
Group insurance policy offers the best benefits to group members. In addition to the risk to life, gratuity benefits are also offered by comprehensive insurance plans. Employees are provided many benefits under a group life insurance plan. However, even though there are many benefits with a group life insurance plan, you should consider it as a supplementary plan and most of your requirements should be covered by an individual plan as individual plans will cover you even after you cease to be a member of the organization. The individual plan offers many benefits and it is possible to cover your spouse, parents and children as well.
Group insurance policy offers the best benefits to group members. In addition to the risk to life, gratuity benefits are also offered by comprehensive insurance plans. Employees are provided many benefits under a group life insurance plan.